FDIC's Tab For Failed U.S. Banks Nears $9 Billion

U.S. banking regulators have paid out nearly $9 billion to cover losses on loans and other assets at 165 failed institutions that were sold to stronger companies during the financial crisis.

 The payments were made under loss-sharing agreements struck by the Federal Deposit Insurance Corp. that shield buyers from much of the risk associated with loans inherited from failed banks. The deals, covering everything from empty Las Vegas shopping centers to nearly worthless mortgages in Florida, are a reminder of the price tag attached to many government programs launched near the worst of the crisis.

As the number of bank failures surged, FDIC officials dangled loss-share arrangements as an incentive for banks to acquire institutions and then work to improve the value of their assets over time.

As of Jan. 31, the latest month for which figures are available, the FDIC has paid out $8.89 billion to banks under the loss-share agreements. Such deals are in place at 236 financial institutions, with the FDIC agreeing to assume most future losses on $160 billion of assets.FDIC officials expect to make an additional $21.5 billion in payments from 2011 to 2014. More than half of that total is predicted for this year, followed by an estimated $6 billion in loss-share reimbursements in 2012, according to the agency. Some of the loss-share deals will be in place for 10 years. Read More